Colombia’s banking system is shaped by a history of economic instability and cultural reliance on cash, with deep roots in an informal economy. Past financial crises, high inflation, and mistrust in institutions have left many Colombians wary of traditional banking.
Now, the modern Colombian banking system presents a complex landscape, marked by both progress and persistent challenges. While financial inclusion has improved, many customers continue to face high costs and subpar experiences. Common fees include charges for ATM withdrawals, interbank transfers, and account maintenance. For instance, withdrawing cash from an ATM operated by a different bank can incur fees ranging from 10,000 to 14,000 Colombian Pesos (COP) per transaction (USD $2.00-$3.00). Additionally, monthly account maintenance fees typically range between 5,990 and 15,500 COP, depending on the bank and account type.
These costs, coupled with bureaucratic processes and inconsistent digital services, have led to a significant portion of the population remaining unbanked or underbanked.
“The banks here in Colombia are impossible to navigate. You typically don’t have apps and the websites are like stepping back to 2005 to try and complete banking tasks!”
In contrast, Nubank (Nu) has emerged as a transformative force in Latin America’s financial sector. Founded in 2013, Nu has rapidly expanded its footprint, amassing over 100 million customers across Brazil, Mexico, and Colombia by April 2023.
Its user-friendly, fee-free model has resonated with consumers seeking transparent and accessible banking solutions. In Brazil, Nu offers a comprehensive suite of services, including credit cards, personal loans, and investment products, positioning it as a formidable competitor to traditional banks.
In Colombia, Nu’s journey began in 2020 with the introduction of a no-fee debit card. By March 2023, the bank had attracted over 635,000 customers in the country, reflecting a year-over-year growth of 200%.
Minimal Functionality
BehindLogin’s research team hosted a screensharing interview with one of our Colombian research panellists to explore the user experience and features of Nu’s Colombian app.
We were surprised by the app’s stark simplicity. With no bells and whistles, it focuses solely on core banking functionality: checking balances, adding money, sending money, viewing statements and transactions and savings accounts or “Cajitas”.
This is a far cry from the feature-rich offerings synonymous with highly disruptive challengers in the UK, US, and EU, or even Nu’s own Brazilian version, which includes a broad suite of financial services.
12% Interest Pots
Nu Colombia offers customers an huge 12% interest rate on funds saved in their Cajitas feature. Cajitas, known in the UK as Pots, allow users to set aside money for specific goals, such as emergencies or planned purchases, within their savings account.
This massively competitive rate is applied daily, making it accessible for customers to earn interest on their savings without needing to lock away funds for extended periods. The feature is designed to encourage financial planning and help Colombians grow their savings effortlessly while keeping their money easily accessible for day-to-day needs.
This offering has been instrumental in positioning Nu as a customer-friendly alternative in a market often criticised for high fees and limited rewards.
What next?
Looking ahead, the Colombian banking sector stands at a crossroads. Traditional banks must prioritise enhancing customer experiences, reducing fees, and investing in digital transformation to remain competitive. For Nu, the path forward involves expanding its product offerings in Colombia to include services like personal loans, insurance, and investment options, thereby providing a more comprehensive financial ecosystem. Balancing this expansion with the simplicity and transparency that have become its hallmark will be crucial.
For BehindLogin, Nubank’s trajectory in Colombia offers valuable insights into navigating competitive landscapes with limited resources. It underscores the importance of understanding customer needs, leveraging core strengths, and adapting to local market dynamics to drive growth.
As both Nu and the Colombian banking system evolve, success will hinge on the ability to innovate while fostering inclusivity and maintaining a customer-centric approach. At BehindLogin, we remain committed to exploring these dynamics, providing our clients with the insights needed to thrive in rapidly changing financial ecosystems.
